August 28th, 2015
It's a good time to buy a home, and about 52 percent of Americans say they will do just that within the next five years, according to BMO Harris Bank's 2015 Homebuyers Report. Continued low mortgage rates are cited as a contributing factor.
Preapprovals and mortgages
In an effort to be more competitive in the homebuying process, many buyers choose to get preapproved before making an offer on a home. In fact, 78 percent plan to get preapproved prior to buying a house, BMO Harris Bank reported. This way, customers not only have a competitive advantage when they place an offer on a home, they can also estimate their monthly payments and overall budget. On average, Americans are willing to pay about $296,000 for a residence with a 21 percent down payment.
While those figures may seem high, low interest rates are helping keep homebuyers interested. The average interest rate for a 30-year fixed mortgage stayed relatively low again for the week ended Aug. 27, hitting 3.84 percent, compared to 3.93 percent last week, Freddie Mac found. Although there was a slight increase, the average rate was 4.1 percent last year at this time. The average 15-year fixed mortgage rate also decreased this week.
During this time of low rates and high demand, people are changing the way they find and purchase houses. Many (59 percent) will visit online websites to search for homes, while the majority (74 percent) still plans to consult a real estate agent, according to BMO Harris Bank. In addition, 78 percent of polled homebuyers said utilizing a mobile application to look at listings is a big advantage.
The mobile age might be contributing to the speed at which people buy homes, as well. According to BMO, 8 percent of homebuyers purchased a house without doing any extensive market research, and 63 percent took fewer than six months to find a home to buy.
All of these factors are positive for the housing market, as buyers are snapping up properties quickly, at more affordable mortgage rates. With the Federal Reserve reconsidering its timeline for raising interest rates due to issues with global financial markets and likely forgoing a September rate hike, homebuyers may continue to enjoy low rates for some time.